Activity II– Applications – Chapter 2

Answer the following questions based on Figures 2.8 and 2.12 in the textbook. Limit your answer to two pages.

1. Why is there such a wide gap between productivity and wage in the U.S, Taiwan, and, to some extent, Japan compared to other countries (Figure 2.8)? Give your opinion

2. What features or characteristics of these primary commodities led to the differences in the trends of the relative prices of each of the following products in panels (a), (b), and (c) in Figure 2.12? Why do some primary commodities show decline, increase, and no trend over time?

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